← The Rent Roll with Jay Parsons
Loading summary
Transcript110 lines
- [00:00]
A
Foreign
- [00:03]
B
welcome.
- [00:04]
A
It's episode number 76 of the Rent Roll, your podcast on all things rental housing apartments, single family rentals and build to rent. Today we're talking about affordable housing. The why and the how. It's getting tougher and tougher even for affordable housing deals to pencil out in today's environment. For a while these last couple of
- [00:23]
B
years been, hey, the only thing that
- [00:25]
A
works is affordable, affordable and workforce housing. Today even that's not a given.
- [00:29]
B
I'm going to walk you through some
- [00:30]
A
data showing how particularly in some high supplied markets, rents have fallen so much on the market rate side as incomes have risen that we've seen a collision between market rate rents and affordable housing rents. And that's pushing some renters from affordable housing into market rate housing. A lot less paperwork that way. And that's also making it harder for new affordable housing deals to pencil out even with the tax advantages of low of the low income housing tax credit. But good news, there still are some ways to make it work and we're going to talk about that with one of the nation's most active builders of LI Tech affordable housing. Dominion and Dominium has been around for 50 plus years. They've built, they've, they've built, they build and operate in 19 states. And we've got their president of development joining us today, Nick Anderson. So that's gonna be a good conversation. Plus on top of that, I'm gonna share with you two charts from a big new report that just came out, the 2026 State of America's Rental Housing Report from Harvard's Joint center for Housing Studies. My top two favorite charts from that report I'm going to talk to you about. And then of course we got to talk about the sense big vote last week which included the major restrictions on large investors. Those are 350 plus homes and buying and even building single family rental homes which could, could decimate the build to rent market, which is crazy.
- [02:02]
B
And we'll talk a little bit about
- [02:03]
A
what that means and what could happen next as this legislation heads to the House of Representatives. And of course the House leadership's been saying they don't necessarily like some of these things. So we'll see where that lands. All right, before we jump into all this, want to give a big shout out to our sponsors. First and foremost, big thank you to jpi, a leading apartment developer with a state of purpose to transform building, enhance communities and improve lives. Check them out@jpi.com JPI is in the cutting edge of some really exciting innovations in apartment development and construction. Also, big thank you to Madera Residential leading apartment operator and owner based in Texas. Check them out@maderaresidential.com and also a big shout out to Funnel. Check them out@funnelle leasing.com all right, so as always, we kick it off with here's a chart and this section is going to be presented by my friends at Mason Joseph Multifamily Finance, the number one FHA construction lender in the Southwest for a reason. Since 2016, Mason Joseph has has closed as many FHA construction loans in Texas and surrounding states as the second and third place lenders combined, according to my friends there. So check them out at Mason Joseph. All right, so as I mentioned earlier, we've got this big new fresh report from Harvard's Joint center for Housing Studies. I don't know why they call it the Joint center, but I'm sure that goes back a ways a little bit. But anyway, they study housing. That's what they do, housing studies. And this is their latest report on the state of America's rental housing. Just came out last week. And this is a really important report because in the housing policy world, Harvard's Joint center for Housing Studies is arguably one of, if not the most influential academic group out there. So you'll see their work often cited. So it's important to understand what they're putting out. And I will say, you know, I've gotten to know these, some of these folks over the years and I think on the whole they do a pretty solid job. One thing I think they do better than most in the academic world is they make a point about the bifurcation of rental affordability. And if you've, you know, followed some of the things I've said and written over the years, you know, I've made the point that I think this is one of the most misunderstood topics in rental housing, how it's not just about you can't just paint in broad brushes. Hey, renters are rent burdened. It's more nuanced than that. It's a bifurcated issues and sometime it's bifurcated issue. And sometimes we see again too much, you know, oversimplification of the story. You know, renters are all just wannabe home buyers struggling to get by. Harvard has done a pretty good job showing the needs are disproportionately concentrated at the lowest end of the market. Now on the flip side, and I'm gonna show you some charts to back that up. But on the flip side, if I can nitpick a little bit. I'll say this. You know, while Harvard has rightfully talked about rent affordability challenges, it's almost always framed as the rent being the problem, the rent is too high. Maybe not intentional. That's how Coffin will come across was like with everything else about rental affordability, it's always about the rent is too high. And I think we could probably do a better job of pointing out that there's also an income issue here. And I know it's a chicken or the egg argument here, but let me give you some stats here. For about a fourth of renters, the incomes are just really, really low, maybe too low. And so for someone making less than $30,000 a year, making 20 or $25,000 a year, there's really no realistic level of rent they can afford without large subsidies. Because we're talking about rents have to be below $500 a month. And anybody who, who knows anything about operating rental housing, whether it's apartments, singing, family rentals or whatever, you know, that's really hard to do, have operating costs below $500 a month. That's not just not going to cover it for, for, you know, after you account for, you know, taxes and maintenance, insurance costs, you know, payroll costs, all the things, it's going to be really unlikely you're get to that level. And so we talk about growing rent burdens because of course this report is
- [06:04]
B
going to talk more about the growing
- [06:05]
A
rent burdens in America. And I want to downplay that too much. I don't want to downplay that too much. But when we talk about that, it's really important to also remember the context of we haven't seen any market rate rent growth for new leases in three plus years, at least on a national level. And that's really important nuance to, to, to embrace here again these nuance. The nuance matters, the context matters. And while I think Harvard does a much better job than others embracing that nuance, I think they could have taken this to another level. And Harvard, I'm sorry and really look at, take an in depth look at the honest reasons that are driving this, including the fact that we have more than a million renters in America with zero incomes at all. And so just think about the implications of that. If you have zero income, even if the rent is a penny a month, they technically can't afford that that household's going to show up as rent burdened. And so that really is going to weigh down on the numbers significantly. So again, we got to have that context in there. But again, to be fair, Harvard does a good job at least pointing out this bifurcation story and I just wish they went into more depth. But to their credit, they do have some, a couple really good charts here that highlight this issue. And I want to touch on that here. There's my two favorite charts from Harvard's report. First one looks at the median share of income spent on rent and utilities by income level. Now if you look at those households making less than $30,000 a year, they spend more than 80% of their income on rent, according to Harvard's analysis of the census data. Now that is important and kudos to Harvard are pointing this out. But there's a natural follow up question to this couple of them. Probably number one, who is leasing to renters who are spending more than 80% of their income on rent, even for a mom and pop? Like, you know, they're going to look at things like, hey, here's, here's the rent. What is your income? Like? That's, that's, that's not somebody who's typically going to be able to sign a new lease.
- [07:54]
B
You're talking about people who are, you
- [07:56]
A
know, who, their situations have probably dramatically changed for them to be in this situation and still in the current place. So that just doesn't on the surface, pass the sniff test. Number two, how in the world could someone spend more than 80% of income on rent and still have money to pay for anything else? And it makes you wonder if they're adjusting for the impact of vouchers and other subsidies. So again, this group really skews the overall trends. And again, I don't want to downplay the challenges here because they are real. If you make less than $30,000 a year, you're struggling to get by. And that deserves policy focus for sure. But we need to better understand what is happening in this segment and why it's happening. And I don't feel like we're, we've, anyone's really done a good job really, really focused on that, on that segment population. You know, it's, it's not, it's a group that's can't afford market rate. There's a lack of affordable housing at their income levels. They're not homeless, but it's somewhere in between. And that's a group that just hasn't got enough attention. Now we also need to point out, as just alluded to is if you're making less than $3,000 a year, it's very unlikely you're living in A market rate rental housing unit of any type, okay. Whether it's institutional, non pop like that's just very unlikely. Many of them at these lowest levels of income, they can't even afford a lot of subsidized housing like lihtc. So we need to focus on the types of housing where these households actually live if we really want to focus on solving the challenges that are particularly acute in that part of the market. And again, I don't know that we have a good pulse on that. And I, I think there's an opportunity to do better research there. Now, by comparison, if you look at this chart, look at those households making more than $75,000 a year. Well, what are they spending on? Rent? They're spending less than 20% of income on rent. And that's a segment that does live in market rate rental housing, SFR and multifamily. And if you're spending less than 20% of your income on rent, that's well below the affordability threshold above 30%. So you're probably doing just fine, by and large. And yet so much the policy spotlight and the regulatory spotlight has been intensely focused on, on operators who generally cater to these upper income renters. Now that's not to say we should just, you know, not worry about them at all. But I will say this. I think sometimes, you know, the headlines and the policy people are just chasing shiny objects. Let's focus on where the needs really are. Now, if there are bad operators and bad actors in the upper income part of the market, certainly we shouldn't let them get away with that. You know, we, you know, no one should be, you know, everyone needs to follow the rules, of course, but we can't take our eyes off the renters experiencing the deepest challenges. And we can't say we're addressing those challenges when we're really, we're chasing those shiny objects at the top of the market. Okay, so that, that is, that is a bit of a gap that I think we need to be more concerned about. And lastly, Harvard also groups together households making. So I talk about the lower income, talk about the upper income. Let's start with the middle, the grouping households making between 30 and $75,000. Now, I don't think that's a really good grouping right there. You know, they're showing overall they spend about 30% of income on rent, maybe a hair above that. But that category is way too broad. Anybody who knows the, you know, as it looks, renter applications works with renters anyway, you know that that's That's a big line. 30 to $75,000. I, I think generally speaking $50,000 is income. That, that's probably a better threshold. If you're making below 50, we're more likely to see affordability challenges. If you're making more than 50, we're less likely to see affordability challenges, more likely paying less than 30% of income on rent. And again, it's going to vary by market, but generally speaking, I think that's a better rule of thumb. All right, I mentioned I have two favorite charts. That was the first one. Here's a second favorite chart I have from Harvard's report. This one shows what share of renter household formation comes from different income levels. Or put another way, who is driving net new demand for rental units. And this chart may surprise some folks, though it shouldn't, especially if you followed some of the stuff that I put out on this topic over the years. But what it's showing you is the vast majority, and not that I'm the only one, of course, but it's topic that I've certainly talked a lot about in it.
- [12:15]
B
But anyway, this shows you that the
- [12:16]
A
vast majority of renter demand is coming not from low income households or even from middle income households, but the vast majority of the demand is coming from high income households, those making at least $75,000 per year. Now you might be tempted to think, well, Jay, that's just because no one could buy a house and so they're renting instead and that's skewing the stats upward. And I hear this a lot, but I'll tell you what, it's wrong. Or at least it's a gross over oversimplification. Okay? This trend goes back more than a decade. It's not a new phenomenon that started when rates popped up. Okay? This trend goes back multiple cycles, even through the times people when rates were cheap and people were buying houses in bigger numbers. Since 2014, Harvard shows we've added about 4 million net new renters with household incomes above $75,000. Meanwhile, we've lost households making under $30,000 and we've only slightly grown the number of households making between 30 and 75,000. So overall, again, that demand is coming from higher income households. That's the vast majority of the net new demand. And again, this is not a new story. It crosses over multiple cycles and it also aligns with some data I've shared previously from CoStar. You look at, they track absorption by product tier, product class, and what they call four and five star properties. We call A, you know, that's the vast majority of the demand from these last five years. That's where the absorption's gone. They've also seen good demand in the B or the, or the three star properties. And then you look at the class C, the one and two star, they've generally seen negative absorption, they've seen move outs. So again, most of the demand has come from upper income households. Now that demand hasn't necessarily kept up with the record wave of supply we've seen these last few years. But by any other measure it's been a lot of demand. It's been a good demand story. And, and, and, and again, I think we'd probably focus more on that, on the, on, on the strength this demand story. If not, we'd have even more supply. So as I said before, we are not seeing and have not seen any real flight to affordability. We've seen a very clear flight to quality. And of course if you have affordability and quality, that could be even better just being, but, but my point here is that just being cheap doesn't equate to more demand, especially if you're in an economically challenged submarket. And some of you know that that's where we're seeing especially high vacancy rates, even, even if it's not a ton of competitive supply. But if you're an economically chall market, a lot of older units that are, even though they're cheaper, we are seeing higher vacancy in those types of spots. All right, so there's a couple things I want to point out from Harvard's report. If you'd like to see the full report, check it out at JCHS Harvard Edu and it's definitely worth a deeper read. All right, in this section, one more
- [15:04]
B
chart I want to cover.
- [15:05]
A
This one's not from Harvard, but it's going to help tee up our conversation with Nick Anderson at Dominium about affordable housing. And this is my crude effort to estimate how lihtec max rents stack up to average market rate rents by metro area. Okay, so if you're taking a look at this chart, let me give you some context first. Okay? And we'll come back to it. Number one, it's all going to start based on area median income. We're getting that data from HUD U. S Housing Urban Development. We're going to then laser in on 60% of area median income or AMI, meaning these are households that make 60% of the area median income and HUD does various adjust adjustments to account for household size. The reason we pick 60% of AMI is that's typically the number for projects using the Low Income Housing Tax Credit or lihtc. What that means is that in exchange for the tax benefits of lihtc, the rents must be capped at levels affordable to a household making 60% of the area median income and spending no more than 30% on income. I'm sorry, 30 of income on rent and utilities combined. And I'm oversimplifying it a bit, but that's generally how it works. Okay, but let's be clear.
- [16:14]
B
I mean when I say this, you
- [16:16]
A
know these are max allowable rents at 60% of AMI. That does not mean that properties are actually at those levels. Actual rents will vary by location and property, et cetera. It's still a competitive market. And so we often see properties will have rents well below the max allowable level. So on this chart I'm taking that 60% of AMI rent and I'm looking at how does that compare to the average effective rent for a market rate apartment inclusive of concessions. Anything above that red line means that 60% of AMI rent is actually above the average market rate rent. And that's especially happening in higher supplied markets. So look at Austin, 60% AMI rents are more than 40% higher than market average rents after concessions. And Raleigh is nearly 40% and then above for above 20% we have Denver, Salt Lake City, Indianapolis and San Antonio. So those are some really big gaps. Now by comparison, the markets where 60% AMI represents a substantial, substantial discount to market rate rent. That's mostly going to be in these higher cost, lower supplied coastal markets. New York, San Francisco, northern New Jersey, South Florida, Southern California, Boston as well as Chicago. So no real surprises there. And by the way, I apologize if you hear some sirens in the background. I'm on the road this week again, so I'm in a hotel or as I record this, so I got some background noise. Hope that's okay. But by the way, on this chart, back to that for a second, I did not adjust for utility. So for the purist, you know, this is not supposed to be 100% accurate view. It's just directionally telling the story.
- [17:53]
B
All right, let's go back to the
- [17:54]
A
markets where 60% AMI is actually above market rate rent. How does that happen and what does it mean? Okay, well, a couple of points and we'll talk to Nick Anderson about this today too. Okay, so these again, these are markets where the LI Tech rent at the max allowable itech rent is actually above the average market rate rent place like Austin, Raleigh. So how does that happen? Well, number one, we know that wage growth has outpaced rent growth in these last few years and that's, I know it's a narrative violation of sorts, but it's certainly true. And it's been true. Also down to the affordable housing LIHTC level as well. Median incomes are outpacing rents. So this chart doesn't mean LIHTC renters are paying above market rent. More likely, renters who qualify for LIHTC can now afford more market rate options as well. And of course market rate apartments have less friction because they have less paperwork, less of a process than a qualifying for a LI Tech building. And so market rate then becomes more competitive with these affordable housing apartments and that puts downward pressure on rents even in the more affordable, in the true affordable housing part of the market. That's, that's filtering at work. Some people say, well all this new supply, it's only impacting the wealthier renters. That's not true. Just talk to anybody who's operating affordable housing in a higher supplied market and they'll tell you that it's absolutely happening. So they're hiring commerce, moving up market, that's creating more availability and that's putting down a pressure on rents. So again, that's why new supply, even at the luxury level is a big win for renters at all income levels. Now number two, and this is really important, I think a lot of people, sometimes they look at this, say well, we just clearly don't need more affordable housing. Well, it's really, really, really important to remember, especially if your policymakers bring this up in your cities. This is a temporary phenomenon resulting from the highest supply wave since the 1970s. It's a point in time stat. But don't assume that stat is going to be the same 2, 3, 4, 5 plus years from now because it probably won't be. Because as, as, as vacancy starts to recover, these market rate operators, after three plus years of no rent growth, they're going to be eager to push rents again. I mean their costs have increased over these last three years. Rents have not. They're going to be eager to start pushing rents again. So the value of LIHTEC is those rents are going to be locked in at a max of 60% of AMI. That's not the case for the market rate. And so what policymakers need to think about is hey, you can't fall asleep at the wheel because supply is a challenge you need to solve for in 2, 3. Anything you talk about now and approve that's impacting the picture two, three years from now, not for today any. So if you're, if, if you sleep on this issue, then all of a sudden you see that gap widen and there's a shortage of affordable housing again. Well, it's going to take you two or three years to respond to that. And so let's keep building affordable housing. That's important to make sure that our policymakers don't get away from that or start thinking, hey, well, we don't need 60% of my in mind needs to be 20% of AMI. Well then nothing gets built. And so again, we need to keep, keep the, keep looking at the big picture, not just the point in time stats. All right, next up, rental housing trivia. All right, today's trivia is presented by Authentic. If you've got a property that's underperforming and you can't quite figure out why, check out their multifamily leasing and marketing audit. They'll dig into your pipeline leasing funnel and comps, tell you exactly where things are breaking down, plus strategies on how to fix it. Listener to the pod, get 50% off. So head to authentic ff.com and click on the banner to learn more and claim the offer. All right, so today's trivia question is, and this is going to come from the Harvard Joint center for Housing report on rental housing I just mentioned, what is the median age of rental housing supply in the United States? How old is it? Is the median age 15 years old? Is it 25 years old, 35 years old or 60, 45 years old? What is the median age of rental housing in the US So give that some thought and we'll answer that question in a bit. But first in the news. All right, in the news, when we address headlines impacting rental housing in this segment, it's going to be sponsored by our newest sponsor, Telecloud. If increasing noi is a priority, your telecom contracts may be one of the easiest opportunities in your portfolio. Telecloud helps multifamily asset managers consolidate Internet voice and dial tone across properties. The average cost reduction is 40% and it is often higher than that. To make it easy, they'll start with a free telecom audit to show you exactly where savings exist before you make a move. So learn more@telecloud multisite.com all right, so our first headline is a big one. Senate Passes Major Affordable Affordability Bill by Elizabeth Warren and Tim Scott. All right, so this is the Road to Housing act and I've talked about This a lot these past few episodes, including last week when this pat, when the passage of this bill was already imminent in the Senate.
- [23:09]
B
If you missed it, you could go back.
- [23:10]
A
I did talk about five potential implications of legislation. I also have a newsletter on the topic, on this topic from a couple of weeks ago@jparsons.com Newsletter but quickly, I don't want to regurgitate a bunch of stuff, but I do want to make some quick points now that it's passed. Okay. I saw the John Burns team, they came out and they called it kind of sarcastically the Road to Less Housing Act. And that's a good way to put it. And I, I call that the Road to Housing Inflation Act. You know, you know, it's funny, it's, it's sad, sad, funny that this, this legislation has been hailed as a landmark housing bill by headline writers. But you're not going to find many housing experts or housing economists who call it that. And the national association of Homebuilders came out against it too because of how it crushed the build to rent construction market. So I suspect that, I don't think this is one of those kind of, you know, bad media things. And I don't be too cynical about it.
- [24:05]
B
I think that though I think the
- [24:06]
A
real issue is you see a bill pass like this with massive bipartisan support and anytime, I think most of us, if you don't know the issue, think, wow, got, you know, it's got, I think it was 90 votes or 89, whatever it was. Like you get that kind of bipartisan. So where you think, well, it's got to be legit, you know, it's, it's got massive bipartisan support. And I think you see some, you know, media, it's been kind of thrown off the scent because they saw that vote and the backers are pitching it as a huge, huge win for housing supply. And so it's easy to assume that must be it. But in reality this just reflects wacky vibe based populist politics. This bill was initially intended to be a pro supply bill, but some of its biggest pro supply housing provisions were cut out and then it was hijacked by the ban on large investors and singularly rental housing. A ban that even extends to build to rent too, for the most part.
- [24:59]
B
I mean, it's a, they do allow
- [25:01]
A
you to build to be fair, but you have to sell it in seven years. And who's going to build something if you have a forced exit in seven years, regardless of the market at that point in time? And if there's no carve out for
- [25:11]
B
your build to rent community communities platted
- [25:13]
A
on a single parcel, which means you have to convert to condos in order to have a pathway to sell it. There was nothing that adjusted the language and the bill to accommodate for that. It's a bad bill. And while it may incrementally boost supply for for sale housing, I think you'll find is even the article, you can look at the articles about it, even they struggle to really clearly tell you how this moves the needle. And even some of the backers up, they say, hey, this is a big win. Well, you know, they list a bunch of incremental things. I mean all of these things are good things, not that some of these pro supply things are bad. But you know, I'm skeptical that this is really going to move the needle in a massive way on housing supply as it's written. And then of course on the rental supply side, there's really no question that this is a supply reduction act. Or put a better way, this is, this was, this is going to result in less rental supply than we would otherwise get absent this legislation, given what it does in terms of forcing sales of single family rental homes, disincentivizing investment in single family rentals, as well as all but banning most build to rent construction as well. So it is regressive policy that if enacted will eventually backfire on millions of families who can't or don't want to buy a house because now they're going to have fewer options and they're going to face higher rents. All right, so what happens from here? Well, it goes back to the House representatives. The media reporting on from the House is that the House leadership doesn't like this bill or some of the aspects of this bill, I should say, and they're not going to accept it in its current form. And the build to rent ban is reportedly one of the things they don't like. So now it could go to what they call conference, which means the House and Senate would both appoint members of a committee that would hash out these differences. So the hope would be that BTR would be carved out. But I think that most people are expecting that even if that happens, that scattered site SFR may still face some type of ban, given President Trump's support for it. Now, on the flip side, the President has also said he's not going to sign any legislation until the SAVE act is passed. And the SAVE act, that's the voter ID bill. And so we'll see what happens. There's always A chance this whole thing dies on a vine. We'll see. Now, in the meantime, it's also worth knowing the president did last week sign an executive order that's actually quite good. Some pro housing initiatives that reduce red tape and regulatory burdens around housing supply and lowering the costs of the, of regulatory, some of the regulatory burden on construction. So that was actually a good, a good executive order that I think is going to have more widespread support. So there is some good happening too. All right, one more headline. It's all another policy issue. It's just a lot these days, right? This one comes from the Federal Trade Commission. It says FTC seeks public comment on proposed rulemaking regarding unfair or deceptive rental housing fee practices. It's quite a headline. All right, so fees, of course have been another hot topic of late. This one driven by the ftc. Now, we don't have time to get all the details of this. I'm not going to go into it very in a ton of depth, but at the short of it is this, this is a step from the FTC to gather public comment on various proposals. And it really is pushing all in rent pricing inclusive of mandatory fees or at minimum, very, very clear disclosure of mandatory fees, you know, prominently displaying them next to the rent somewhere where it's really obvious what those fees are. It also touches on applications, fees, security deposits and billing. So check that out if it could impact you and consider making your voice heard on some of these topics.
- [29:05]
B
And real quick, you know, I've said
- [29:06]
A
this before, I'll say it again here. I do think all in pricing is good for everybody in the long run. I think it's better for operators, I think it's better for renters. And if anything good comes from this, I think it's just a more universal standard on what the true cost of renting really is. Which I think that makes it easier for renters to compare one property to the other. Makes easier for those in the business to compare, you know, one property versus the other. So, you know, price transparency is a good thing. And, and by the way, if, if you missed it, a while back, we had an episode with Joanna Zabrinsky from BH Management on this topic and she made some great points about it. Shared results from a big pilot program that BH did on all in Pricing. And the big takeaway if you missed it was that it was that all in Pricing. You know, the issue is that you're showing a higher rent than sometimes your competitors because you're rolling in the mandatory fees that your competitors are not. And so it doesn't create a level playing field. That's why I think everybody just wants a level playing field. Right.
- [30:01]
B
And so one thing Joanna explained from
- [30:03]
A
this is that when they did this, they were a little worried about what it would do. What they found is it did result in fewer leads, which you'd expect because of the higher rent or the higher all in price, even if the actual total cost didn't change. But it resulted in a much higher share of qualified leads. And so it ended up actually being a win for the business in many ways. And so Joanna's been a big proponent of it based on their experience. All right, next up, it's time for good news.
- [30:31]
B
This is our segment where we like
- [30:32]
A
to highlight good things happening in the rental housing space because, hey, good things happen too. And they just don't get as much attention. Good News is presented by friends at Apartment Life. Apartment Life coordinators help apartment owners care for residents by connecting them and meaningful relationships. This in turn benefits everybody, from the residents to the on site staff to the community's bottom line and the investors. So if you're owning or operating apartments that aren't partnering with Apartment Life, check them out@apartmentlife.org and this week my friend Pete Kelly at Apartment Life, he shared a story from DLP Capital, a firm that he said not only invest in naturally affordable housing, naturally occurring affordable housing, but also invests in people. And they've built, they built things like an adaptive playground for children with special needs. They've covered funeral expenses, they've set up nurseries, they even provided free rent for a long time resident caretaker so she could focus on her sick husband. So lots of good things. But then here's the latest. Pete shared me a recent story that from a woman named Lupita who works for Apartment Life, service provider that helps support DLP communities. Lupita's daughter has a medically complex diagnosis and spends a lot of time in and out of the hospital, unfortunately. But when DLP learned about their situation, they went out of their way to design a special experience for this family, sending them to Dollywood this summer for a special getaway. And to make sure that Lupita's daughter can fully enjoy it, they've arranged cooling accommodations, minimal wait times and access to shade so she could just be a kit for the day rather than a patient. And it's a powerful reminder that behind every apartment community are real people with real stories. And so big, big shout out to DLP for showing what it looks like to care for people. And as a reminder, if you have good news story to share email info and we may feature it on a future podcast. Now let's get back to our trivia question of the week presented by Authentic. The question this week was what is the median age of America's rental housing supply? Is it 15, 25, 35 or 45 years old? If you guessed D 45 years old, then pat yourself on the back. You are right, Harvard and their report that just came out, they wrote this, they said rental units in the US have never been older. With a median age of 45 years in 2023, up from 36 in 2003. The aging housing stock has accumulated significant repair needs and requires investment to maintain adequate conditions. In 2023, 3.6 million renter households, or 8% of the total, lived in moderately or severely inadequate housing with multiple structural deficiencies like water leaks or large open cracks and holes in the floor or serious problems, electrical, heating or other basic systems. So that's a, that's a really incredible stat. And, and you know, I think we have to build more just to accommodate or just to offset obsolescence, even in some markets that don't necessarily have a lot of household formation or population growth or in addition, of course, investing heavily in modernizing some of these buildings. I've made this point before. I think over the next 10, 15 years, we're going to have a lot more issues around maintaining some of the aging housing in the US and it's going to create some challenging questions around how do you preserve both affordability but also these buildings that are in many cases aging poorly. So I think that's gonna be a big topic. All right, next up, it's time for today's interview sponsored by funnel, the AI and CRM software trusted by four of the six major REITs and many more leading operators like BH and Cortland. To learn how Funnel can help your property centralize operations and automate everyday tasks, visit funnelleleasing.com all right, our guest today is Nick Anderson, the president of development for one of the nation's biggest builders of affordable housing, Dominion. Many of you know that name. They've been around for 50 plus years. They've managed more than 40,000 apartments in 19 states. They were based in Minnesota for a long time. They've since moved their headquarters to Dallas, but still maintain a big presence in Minneapolis. Dominium started off in the 1970s building Section 8 housing. That was prior to Li Tech's existence. But since the creation of the LIHTC program nearly 40 years ago. Dominium now focuses on that business. So I'm excited to talk shop with Nick. And let's jump in.
- [35:15]
C
Foreign.
- [35:20]
B
Welcome to the interview portion of today's podcast.
- [35:22]
A
And I am honored to welcome in Nick Anderson.
- [35:25]
B
Nick, thanks so much for being with us today.
- [35:27]
C
Hey, Jay, thanks for having me.
- [35:29]
B
All right, so every time I have a guest on, I always like to just, you know, start with your story. So obviously, affordable housing development is a niche within a niche. And so tell us, how did you get into this world?
- [35:42]
C
Yeah, you know, it's funny, Jay, I think my story is probably similar to a lot of stories of people who get into the industry. I kind of stumbled into it. I didn't really have a focus on affordable housing or a deep interest in getting into it. You know, I'm from Minneapolis, Minnesota. I went to the University of St. Thomas, which is a small private institution in. In St. Paul, Minnesota, Catholic College, and they happen to have a real estate program. And I was always interested in real estate, but didn't know exactly what I wanted to do or get into. Dominium was doing some on campus interviewing, and the head professor of the real estate program kind of gave me a heads up. I applied and I interviewed with Dominium in my senior year at St. Thomas. And thinking back on that, I remember being really impressed with the people that I met with, I met with, who became my mentor during the interview process. And then after the on campus interviewing, I was able to meet with a bunch of people at Dominium's office. And among the people I met with were two of the four owners of the firm at that time. So I thought it was pretty cool that I was able to kind of get that time with the owners and the entrepreneurs. And I knew I'd be able to work really closely with them if I joined Dominium. So I didn't even bother to interview anywhere else after meeting with them, got an offer, took the job, and I've been with Dominium ever since. So I think I just started my 19th year with the firm, been in the industry for almost 20 years now, and I don't think I'll ever leave the industry at this point.
- [37:34]
B
Yeah, I love it. Yeah, most of us do stumble into this. And yeah, the 20th coming up. You better tell the bosses to do something good for you for the 20th.
- [37:42]
A
The partners owe you something.
- [37:44]
B
So tell us a little bit more about Dominium. Obviously, it's a big name in apartment development, specifically affordable development for anybody who doesn't know already. But for those who don't just give us some context, terms of number of markets, units built, kind of the holder
- [37:59]
A
sale strategy, et cetera.
- [38:02]
C
Yeah. So Dominium is really exclusively focused on developing multifamily housing through the low income housing tax Credit program. You know, we were formally headquartered in Minneapolis. We're in the process of establishing our Dallas, Texas office as our, our corporate headquarters going forward. I'm based in Atlanta, Georgia. We've got three regional offices in Atlanta, Dallas and Phoenix. And I started with the company in my hometown, Minneapolis. And as we did a lot of development work within the Twin Cities market area, we knew that if we were going to continue to grow as a company, we needed to have people where the housing was needed most. And so in 2020, we made a decision to open three regional offices in Atlanta, Dallas and Phoenix and really decentralized our development team. So we've got development staff in Atlanta, Dallas and Phoenix now. And we're really, you know, we've been pretty focused on Sunbelt Tax Credit housing development. The company now operates over 40,000 apartment units in 24 different states. I think it is.
- [39:24]
A
Wow.
- [39:26]
C
And we're really, really pretty focused on developing in places like Florida, Georgia, Tennessee, Texas, Arizona, Colorado, places with, you know, healthy job growth, population growth. You know, we, we decided to sort of put our development staff where, you know, the growth is happening and where the housing is really needed the most. And we almost exclusively develop within the tax credit housing program. So, you know, we're building projects that in exchange for capping rents and renting to residents that have qualifying income levels, we receive a tax credit that we can sell to investors to generate equity for the project. So it's basically a subsidy for the cost of constructing the project. And then in exchange we're capping rents at affordable levels.
- [40:20]
B
Yeah, no, I love the model. I tell people all the time I don't know the space, and they're just looking at it. It's like, this is, like, this is, this is like this is a version of rent control. That's the carrot with the stick together,
- [40:28]
A
not just the stick.
- [40:29]
B
And there's a, it's, it's funded rent caps, essentially. So tell us a little about, you know, I want to ask you a lot of other stuff about affordable housing, but just give us some idea real quickly of the typical, what you typically build, you know, unit sizes, mixes amenities, et cetera.
- [40:45]
C
Yeah, so we really have, I'd say three primary product types that we build. You know, we've got a three story garden style family product that, you know, again, is Financed with tax credits. These are, you know, typically right now, larger unit mixes. You know, the garden style is a little heavier on the amenities. We've got, you know, large clubhouses, pools, playgrounds, pavilions with grilling areas that, that sort of stuff. But you know, right, right now, lots of two, three and four bedroom unit mixes. We've found that larger unit types are in high demand or at least we think they will be. And then you know, tax credit rent to market rent advantage seems to be larger as the unit size is bigger. So you know, that's sort of a theory that we have. But got a three story garden style family product that we do a lot of. We've got a four or five story senior tax credit product that's typically age restricted at either 55 and up or 62 and up sometimes if it's HUD, HUD financed. And then the third type, and this is a newer product type for dominium is we have a BTR type product that also financed with tax credits. You know, larger units, typically three and four bedroom unit types. And that's a lower density product product than our, than our garden style. But it's serving a similar resident profile. And those are a little bit lighter on the amenities. But you know, the amenities really the larger unit and the, and a little bit of a yard and stuff like that with those, with those products. That's kind of the three product types that we're doing a lot of right now.
- [42:33]
B
That's great. The BTR works for this too. And then who's your typical renter?
- [42:39]
C
So our typical renters are going to be folks that make 60% of the area median income or lower. So the program that we work in requires you to rent to residents that make at or below that income level. And then of course the rents are capped at levels that are affordable to them. So really our residents are people making, you know, roughly anywhere from 30 to $50,000 a year, sometimes a little more or less depending on the market that it's in. The income limits are, are set to the area. It's 60% of the area median income for the metro area where the project is located in. So depending on what the area median income is for that particular metro area, those, those income levels kind of go up and down based on that. And so we're, we're serving a lot of service industry workers, retail workers, you know, people that are kind of early on in their career and, and a lot of single moms as well. We're, we're serving seniors as well that are kind of within that same same income band with the senior product that I mentioned too.
- [43:51]
B
So are you more likely to see kids in one of your properties than you would in a typical class A conventional apartment building?
- [43:59]
C
I think that's right, yeah. And some of that's probably due to the unit mix that we're building. You know, the rent caps that are in place for tax credit projects are adjusted up or down based on unit type. And then the maximum income level that a resident can make is also adjusted up or down based on the family size. So the more children, the higher your income level can be. But, but yes, we, we seem to, I think I might get this number wrong, but I think we, we average over 2 kids per household in most of our family projects. So we, we house a lot of children for sure. Yeah.
- [44:47]
A
Yeah.
- [44:47]
B
So do you build your family friendly playgrounds and stuff that we don't see in conventional apartments anymore?
- [44:53]
C
Yeah, we actually have a, a standard where we build a bus stop at the, at the front of the property toward the entry because we're housing so many kids. And so we'll do like a bus stop structure that's part of our kind of standard amenity package. You know, we, we've done both indoor and outdoor playgrounds. So some of our clubhouse clubhouses even have indoor playgrounds if the project's in a really cold or hot climate. We've done some indoor playgrounds in the Phoenix metro area. We've done some in, in the Minneapolis metro area for, for the opposite reason. But yeah, we're, we're very heavy on kind of kid friendly amenities for sure.
- [45:37]
B
That's awesome because you never ever see these in conventional apartments anymore. So it's good that, that we have that in some of these affordable housing units. So now let's talk more about this a little bit, this bigger picture, affordable housing. Because you know, you have, you have a tough job. This, this, you know, I find obviously rental housing in general is misunderstood. You add affordable to the front of that and then it gets even worse. You have people who think if you're building affordable housing, oh man, you put in the projects and there's going to be crime and all this other stuff. So as your team is working to get approvals for these critical, as best say, projects, but people get the wrong word. I mean, these, these valuable apartment communities in working with cities, get approval. What are the biggest myths and misconceptions you have to just constantly address?
- [46:27]
C
Yeah, you know, I, when I tell people what I do, you know, one of the one of the most common questions I get immediately after trying to describe it is oh, so, so you build like Section 8 housing, right? And I have to explain to people that Section 8 is sort of the program of the past. And the Section 42 Low Income Housing Tax Credit program is really the program of today. And it works very differently. You know, Section 8 subsidized the rent directly. Section 42 really subsidizes the cost of developing the project or the community, as you put it, Jay, probably more eloquently, in exchange for us capping rents at a, at a level that's affordable. So, so yeah, when we bring up affordable housing, a lot of people get this image in their mind of the, of the project housing, the public housing of the 1970s. You know, a lot of these, you know, I think of them as ill conceived housing developments where you're, you're almost, you're building like a tower structure. It's really dense, it's not really well suited for families with children, that, that sort of thing. This is not that. It's not, not that at all. It's really mostly suburban stuff is what we're developing there. Obviously there's projects that are urban that are done within this program as well. But if you walked by one of our affordable housing properties or communities, you really wouldn't be able to discern it from a conventional market rate apartment at this point. The federal program doesn't put in place a lot of requirements from a construction or design standpoint. But there are state housing agencies that administer this program at the state level. And they've all developed plans for allocating these credits which are called Qualified Allocation or Qualified allocation plans or QAPs. And these QAPs lay out all the, the requirements for the state specific program. And most of those states have put in some really stringent and high quality requirements for construction, for design, for energy efficiency, that sort of thing. And so the program has really evolved to a point where if a community is built under this program, it's really going to be pretty nice. And the other thing about it is that the credits that these projects deliver to the investors are delivered over a 10 year period and they're earned over a 15 year compliance period. So as a developer, we're building these properties and we're owning and managing them for 15 or more years. And so on the front end, when we know we're going to have a 15 plus hold period, we want the project to kind of stand up to the test of time. We want it to be durable and to Operate well and compete well for a long period. So we have an eye for high quality, long term, durable materials. Whereas, you know, merchant builders who are developing a property and, you know, looking to lease it up, stabilize and sell it in three years, might not even have that same kind of long term or more durable outlook with the, with the product or with the development. So it really is very different than what people typically have, you know, in their head. When we bring up affordable housing, we spend a lot of time trying to educate and show people what it really is. So.
- [50:05]
B
Yeah, and you alluded to this, Nick, but, you know, I think, and I could vouch for this personally, I think one of the best testaments for, for LIHTC development, particularly when it's done right, you know, is that when you drive by it, you'd have no idea it was financed through a low income housing tax credit. And that's affordable housing. And so I'm curious, when you meet with, you know, people, when you meet with cities and, you know, planning and zoning commissions, whatnot, when you're able to just show them, hey, here's some examples we build, here's the concept plan, does that help to overcome resistance a little bit to kind of realize that, you know, these are actually, these are nice looking buildings?
- [50:39]
C
It can. Yeah, I think that's one of the, the most helpful things that, that we do. You know, when, when you go into a new market where we may not have an existing property, it's a little bit more challenging because you're trying to show people photographs or pictures or renderings of what it might, might look like, and they don't trust that as much. If, if you're pursuing a project in a metro area where we've built half a dozen or a dozen projects, one of the most impactful things that we can do to get people to really understand it is to just come and tour a property we've recently built. And so we try to get city council members, county commissioners, even state legislators out to our, our projects, our communities to understand what it, what it really is. And so if we can get them to come and take a tour, walking through a property helps a lot more than trying to show them a rendering, an architectural rendering or a photo or something like that. You know, so we, we try to do that as much as we can. We, we have a practice of, you know, holding groundbreakings and grand openings whenever possible. And we're, we're inviting a lot of the local elected officials to those events to try to, you know, just continue to educate about what, what this really is.
- [52:00]
A
So, yeah, that's great.
- [52:01]
B
I mean, so it's, that's critical work. So let me ask one thing I'm always curious about is that obviously we know the financing is different, the rents are different, but other than those critical pieces, what are the, what other big differences are there between a LIHTC community that you build versus what one of your peers would build on the conventional, you know, market rate side? And let's assume, you know, both kind of suburban deals, nothing, you know, not, you know, high density versus low density, but all else being equal, like, how different are they?
- [52:35]
C
You know, they aren't really different. You know, I'd say maybe one thing that's, that's different is unit mix. Maybe, you know, I see market rate developers developing, you know, generally smaller unit mixes than, than we would. You know, as I mentioned earlier, our rents are, you know, set according to the, according to the unit type. So as the unit type, you know, as you add bedrooms, your rent is increased, the maximum rent is increased. And when you think about it, the expensive square footage to construct or to build is the kitchen space, the bathrooms. Right. Bedrooms are less expensive square footage to build. And so what we've found is you add a bedroom, the marginal cost of that is pretty manageable in comparison to the increase in rent that you're allowed to charge under the rules of the program. And so we're building larger unit mixes, especially now with the higher interest rate environment that we're in, with some of the construction cost inflation that we've seen. That's a method that we've kind of implemented to, to continue to make projects feasible. But that's one thing that I would say is, is different, but from a construction design, you know, quality of material standpoint, I don't really see a material difference in, in what we're building.
- [54:04]
B
And also, you know, just building on your point, Nick, is that the, you know, you obviously have a higher rent for the, for the more units, but you just said if you have more than two kids per household, they need more bedrooms too. And so it seems like you're meeting the demand that, you know, frankly, I think a lot of the market rate sector, as you've alluded to, and you're, you're absolutely right on this, is in this last 15 years, we've seen more and more shift towards smaller units, you know, more one bedrooms fewer twos and threes, especially threes. So I think it's great that you're doing that. So, you know, building on that question, then I think this is, this is something I hear a lot on social media that a lot of people, I think obviously in your world and you know, any kind of development or construction, they get this. But I want to you to help me. Kind of myth bust here is that there's a lot of misunderstanding around the costs of building affordable versus conventional. People say, well, they only build luxury apartments. And, but I think what's hard to understand sometimes is that, you know, just because you're building affordable, the land sales
- [55:02]
A
are going to sell it for cheaper.
- [55:03]
B
Just because you're building affordable, the labor
- [55:05]
A
is not going to work for cheaper.
- [55:06]
B
The, the people selling you materials aren't
- [55:08]
A
going to sell you for cheaper.
- [55:09]
C
Right.
- [55:10]
B
So how much can you really curb costs through value engineering? Given that most of these, you know,
- [55:18]
A
costs are not going to change that dramatically?
- [55:20]
B
So how much can you really curb those costs? And is it even possible to build affordable housing at 60% AMI in most markets without a major subsidy or a tax credit?
- [55:31]
C
Yeah, I think the, you know, obviously we go through a value engineering process on every project that we do, but I think what we found is that the amount to which you can sort of move the needle on overall cost by using cheaper or less expensive materials or kind of stripping away the finish level of the product isn't really that substantial. And when you consider, you know, the durability and how you're sort of setting up the development for longer term success, when you're using the higher quality materials on the front end, you know, knowing that we're going to be owning, managing and operating these properties for a 15 plus year period of time, it just makes more sense to us to build a high quality product on the front end. You know, and the other thing that we think about is. As you enter a project or you start to pursue a project, you know you're going to be in that project for 15 years, you know, there's a more of a willingness to be focused on the long term and just building a quality product. We know that over a 15 year period of time, we are going to have a soft spot in the market that we're going to need to work through. And if we build a really high quality product on the front end, we're going to work through those soft spots, you know, a little bit easier and do a little bit better through those times. I think the, the thing that we've found really moves the needle on cost is, you know, square footage. So to the extent that you can get square footage down, that's what's Going to really move the needle on cost. And we were building larger unit types, more bedrooms because there's increases in rent that are allowed under the program with the more, the more bedrooms that you have. But we've spent a lot of time kind of designing prototype floor plans. We've got a standard floor plan design process that we do iterate it, but we kind of stick with standard floor plans that we've gone through in excruciating detail to make sure that you've got the right amount of width for a queen size bed and two nightstands and that you've got the right amount of circulation space at the foot of the bed, between the bed and a dresser and things like that, so that it's functional but it's not bigger than it needs to be to be functional, if that makes sense. And so we're trying to squeeze square footage out while keeping a high quality, highly functional product. And that's kind of what we focus on with our value engineering process.
- [58:15]
B
So for just in round numbers, like let's say if you're building a two bedroom apartment, like how, like what type of units square footage can you get that to roughly?
- [58:25]
C
I think our, I think our two bedroom standard floor plan is right around 900 right now. Something like that. I think our.
- [58:32]
B
You're not talking super small.
- [58:33]
A
We're still talking.
- [58:35]
C
Yeah, yeah, decent sized unit. But it's like I said, it's, it's nice functional, but it's not. There isn't wasted space. I'll say it that way.
- [58:44]
B
Well, we've all seen the buildings with wasted space.
- [58:46]
A
No one needs that.
- [58:47]
C
So yeah. Right.
- [58:49]
B
Now let me ask you about one of the hot topics right now in the affordable housing space. And, and I know you and I have been doing this, I'm, I'm a few years behind you, but getting close. And I don't remember ever having so much focus on this issue as we do right now. And that is that with so much market rate supply in the market, we're seeing cases and not everywhere but in some markets where Li Tech Max rents at 60% AMI and you know, 30% income on rent, they can sometimes they are increasingly coming into the class B or certainly class C but even class B rent levels. So the middle of the market for the conventional space, still cheaper than a lot of the new class A plus stuff of course, but the bulk of the markets were in that B and C space. And so wages have been growing a lot faster than rents. And now you have people who qualify for affordable housing. But may also get into a decent
- [59:43]
A
market rate property without the paperwork associated with, with lihtc.
- [59:48]
C
Yeah.
- [59:49]
B
You know, again, I'm hearing this issue happening a lot across the country, so particularly in high supplied markets. So how is that impacting what, what and where you can make these affordable housing deals work?
- [60:02]
C
Yeah, so we, you know, when, when I mentioned about five years ago, we, we embarked on this process to open our three regional development offices in Atlanta, Dallas and Phoenix. We, we picked out those three locations in large part due to the, the need for the housing, but where the housing need was, you know, highest, we saw a pretty wide disparity between the tax credit maximum rents and what the market rents were at the time. So market rents might have been, you know, in a lot of markets that we were working in, might have been 5, 6, even $700 above the, the tax credit maximum rent. And you know, today that rent advantage, if you will, the difference between the market rents and the tax credit rents is a lot narrower, you know, and so it makes it even more important that we're building a high quality competitive product, especially considering we're going to be with these projects for 15 years when we do them. But you know, we've seen a lot of markets where that, that rent advantage evaporated and now there's, there's actually situations in some markets where the tax credit rents are above market rents. In some cases we track the HUD fair market rents, which are the, the 40th percentile rent for the market, and we kind of benchmark our tax credit rents against that to get a sense for kind of what that rent advantage or lack of rent advantage is in the market. And we try to pursue projects in markets where there is still a healthy differential between market rents and tax credit rents. But the more that we see additional supply kind of coming online in some of these softer markets that have seen the really high supply, the more and more challenging it becomes for us to achieve those max rents. There might, you know, we have like, we have situations in Austin, Texas right now which, you know, obviously has seen a lot of apartment supply over the last few years where we aren't able to even achieve the maximum tax credit rent because what we can achieve is actually below that. So it's almost like we're operating as a market rate deal at that point. So yeah, I mean, we, you know, on the front end of pursuing all these projects, we're doing a lot of market analysis to understand, you know, a, are we able to achieve, do we think we'll be able to achieve those tax credit maximum rents and if not, what, what rent can we achieve? And at that point we're, we're almost looking at it like a market rate developer just, you know, developing within this program that allows the tax credits that, that we use to help finance them.
- [62:52]
B
Yeah, no, that makes a lot of sense. And I think also too, given your points about, I think a lot of people not recognize the differences in the unit mix. And so if you are somebody who needs a bigger unit and you have kids and you got a playground, like that's still going to be a competitive advantage and maybe make those deals work
- [63:08]
A
in cases where the market rate one wouldn't.
- [63:11]
C
Sure, sure. Yeah, that's a good point. I think, I think that's spot on.
- [63:16]
B
All right, so I want to ask you kind of a big picture sky in the pie. In the pie in the sky question to cap things off here is obviously, you know, the LIHTC program, you know, it's been around for, for what, almost 40 years now. And it's maybe it is actually 40 years.
- [63:33]
A
I think it is.
- [63:35]
B
So a lot of goods come from this program, obviously, but it's not perfect. You know, we all have, you know, there are always ways to make it better.
- [63:41]
A
It's got its critics.
- [63:42]
B
And so if there's one, one or one. But if there's something that you could change about the program to make it more efficient to get more housing built or eliminate barriers that prevent more housing from getting built and you have the power of the pen here, what would you do to make it even a
- [63:59]
A
better program than it is?
- [64:01]
C
Yeah, I don't know. Hopefully you don't see this as sort of a cop out answer. But I don't know if I have one specific thing that I would change, but I would just say that this program has been in place since the Tax Reform act was passed by the Reagan administration in 1986 and projects really started getting built within the program, you know, in the early 90s. And you know, like anything after, you know, 36 years of projects being done in this, in this program, you know, it, it, over time there's a lot of, of additional rules and policies and regulations that just get layered on top of one another over time. And you know, it's all out of, out of good intent. But I think, you know, right now as a tax credit developer, you're, you're asked to do a lot, you know, especially we haven't really gotten into the differences between the tax credit types, but there's 9% credits and there's there's 4% credits and they come with different, different requirements. The 9% credits are competitive. There's only a finite pool of those credits available in each state. And it's, it's. They might receive four applications for every one project that they can fund through that program. And especially within that side of the, the industry or program, you know, tax credit developers are really asked to do a lot. We were asked to almost go, go beyond what it is to develop housing. It's, you know, kind of layering in social service initiatives and, and different things that as a, as a housing developer, you're not always, you know, fit for. We're not, not the best people to be carrying that stuff out. And you know, I think the program, as time goes on, has just been asked to do more and more and more over time. And that shows up in the cost to develop these projects. It shows up in the cost to operate these projects. So to the extent that we could strip away some of that layered on regulation and get back to just letting the program do what it was designed to do, which is build housing, I think that would be positive and I think it would allow for more housing to get built.
- [66:22]
B
Yeah, no, very well said. At the end of the day, just need more housing built. And we've seen certainly there's also some cases we have cities are adding on
- [66:30]
A
so many requirements to drive up the cost of it and then make the
- [66:32]
B
tax credit less, less efficient and less
- [66:35]
A
housing gets built, which to your point, that's not accomplishing the root goal.
- [66:38]
B
So. Yeah, so almost 40 years of the low income housing tax credit. We got a birthday coming up later this year.
- [66:45]
C
Yeah.
- [66:46]
B
Well, Nick, thank you so much for making time for the podcast and thank you for all you do to build affordable housing across the country and best of luck through the rest of 2026.
- [66:56]
C
Thanks, Jay. I appreciate you having me.
- [67:00]
A
Foreign. That's wrapping Episode number 76. Big thank you to Nick for being our guest today. Thank you also to jpi, Madera, Funnel, Mason, Joseph, Authentic and Telecloud, and thank you to all of you for spending part of your day with us. We'll see you next time.